Information Acquisition, Decision Making, and Implementation in Organizations

53 Pages Posted: 22 Mar 2016 Last revised: 22 Aug 2019

See all articles by Hideshi Itoh

Hideshi Itoh

Waseda Business School; CESifo (Center for Economic Studies and Ifo Institute)

Kimiyuki Morita

Senshu University, Department of Economics

Date Written: August 5, 2019

Abstract

We study a decision process of a two-agent organization that consists of a decision-maker who selects a project and an implementer who implements and executes the selected project. Each of the decision-maker and the implementer has intrinsic and possibly divergent preferences over projects. Key features of the model are that (i) there is the separation of decision and implementation, and the performance of the selected project depends on the implementer's costly effort; and (ii) the implementer engages in both acquiring additional information and implementing the project. We show that the implementer's incentives to gather information and to implement the selected project interact with each other in a non-trivial way. We in particular show how this interaction affects the optimality of diversity of preferences in organizations as well as the implementer's strategic communication.

Keywords: Decision Process, Preference Heterogeneity, Information Acquisition, Communication, Biased Agent, Complementarities

JEL Classification: D23, D82, D83, M11

Suggested Citation

Itoh, Hideshi and Itoh, Hideshi and Morita, Kimiyuki, Information Acquisition, Decision Making, and Implementation in Organizations (August 5, 2019). Available at SSRN: https://ssrn.com/abstract=2751969 or http://dx.doi.org/10.2139/ssrn.2751969

Hideshi Itoh (Contact Author)

Waseda Business School ( email )

1-6-1 Nishi-Waseda
Shinjuku-ku
Tokyo, Tokyo 169-8050
Japan

HOME PAGE: http://https://www.waseda.jp/fcom/wbs/en

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Kimiyuki Morita

Senshu University, Department of Economics ( email )

Tokyo
Japan

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